Development Is A Continious Process [Jan 2002]

DEVELOPMENT IS A CONTINUOUS PROCESS

Introduction:
Geographically Bangladesh is located in a natural disaster zone. A large number of rivers split the country into many low lands and plain lands. To control all these natural obstruction Bangladesh have to spend a big amount every year. Most of the money is from foreign grants and loans. Naturally it added a burden to our economy. Past 30 years we received as many as 36 billion US dollars debt and still we have a balance of debt around 17 billion dollars. A major portion of this money suppose to use for developing the infra structure of our country. But there is an allegation that only 25% of this money was used for the original purpose. Balance 75% money was misused! A recent seminar of an economist forum revealed this information. How a large amount of foreign aid was misused? There is no clear explanation from any source. But lets have a simple look how the interruption of development affects to our total economy and how we can overcome it. For better understanding we can take it in 3(three) parts, now we will look at the 1st phase.


PART-I (Development Criteria & Obstructions)

Development is a Process:

Development is not a destination rather it is a process. All developed country reached the destination of prosperity under a constant active development process for years. There are a lot of hardships involved to continue the process. Except few, all of the European countries had to pass crucial financial crisis until 1950s. Most of the East and South-East Asian country was under poverty level 30 years ago. But they all crossed that line and some of them are become economic giant by end of 20th century.

Where was the magic? The magic is A Continuous Development Process in every sector.

Regardless the democratic or autocratic governmental system development was on its own way in all those countries. Change of political government didn’t affect the development works.

Primarily a total development needs to contemplate following elements:

1. Higher Education Rate
2. Standard Infra-structural Facilities
3. Social and Political Stability
4. Implementation of Rules of Law
5. A Government with Dynamic Bureaucratic System

In the context of Bangladesh we cant find any of above elements in a satisfactory rate. That causes us to remain a backward and poorest nation in the world. What are the reasons that interrupted our development process? Among other factors we can see one of the main reason is the political change of government. Changes in power have a negative impact on our economy always. It becomes a kind of common tradition that whenever power hand over to a new party, he just simply blame to previous ruler for the bad shape of economy and never consider other factors involved.

In past 31 years changes of political government was as follows:

a. 1972-1975 Awami League
b. 1976-1981 BNP
c. 1982-1990 Jatiya Party
d. 1991-1996 BNP
e. 1996-2001 Awami League
f. 2001-2006 BNP

All the government works under some particular agenda for development. Government allocates the money under the program named ADP (Annual Development Program). A big amount of ADP is procured from Foreign Debt and Aid. But many of the projects were remain half done due to the inefficient management and corruption in the working process. Coordination between different wings of government is another quandary that is helped by poor bureaucratic system. Even the decision making for a project takes several years. But the most imperative problem in the development work is political change of a government.

It interrupts the development work severely. Politicize everything including development works is an impractical, but a common trend in Bangladesh. For example, the project taken by BNP government cannot expect sincere follow up by next AL government and BNP will do same way with AL project. Our 31 years experiences have seen this trend for many times. No government praise any project taken by previous government if they are political rival.



Where the 36 billion dollars used

During past 31 years Bangladesh received about 36 billion dollars foreign debt. It’s not a small amount for a country of our size! But where all those money had been utilized?

Food? Education? Public health? Electricity? Roads & Highways? Tele-communication? Housing? Urbanization? Social Security? Disaster protection? Poverty alleviation?

How many of above sector have been developed to a satisfactory level? We only achieved the target of the production of rice. Not any other sector developed to the minimum satisfactory level.

All the development projects can be fallen in the following 4 types groups:

1. Successful project
2. Half-Successful project
3. Failure project &
4. Unfinished or pending project

Government should take a measure how many projects have been fallen in which group and why? Who is the responsible for the failed project and why unfinished projects were not finish in due course? Another remarkable factor must take into account that most of the government project cannot be finished with the budgeted cost. Sometimes the cost increased more than 100%. It happened to Barapukuria coalmine, Madya para shila project, Tista dam, KAFCO and many other projects. To avoid overlapping time and cost government should consider all the related factors carefully before approving any project. During implementation keeping it in mind that we are using lending money and repayment will be done from our own resources including the interest that increases our budget deficit.



PART-II (Development of Other Asian Countries)

How other Asian countries Excelled

Countries of East and South East Asian region are used to pick up as a development model for Bangladesh. But did we do what we supposed to do? How they have developed themselves to a certain level? How they have attracted huge foreign investment? How they managed to use foreign debt to develop the infrastructure that helped them to enhance the foreign investment at a large scale?

They have designed and constructed their country to attract foreign investment. As foreign investment enhanced, their economy had been boosted in a short time. Development reaches to a satisfactory. That's why many of those countries stopped borrowing external debt from IDA etc.

We may take a look at some Asian countries that stopped borrowing from IDA as per mentioned year below:
Indonesia: 1980
Philippines: 1991
Thailand: 1979
China: 1999
Korea: 1974
None of above countries enjoyed better financial stability than Bangladesh even 30 years ago. The have had worst infra structure facilities than Bangladesh. But most of the country achieved financial stability within two decades. From the experience of south East Asia it has been found that political stability is the main pre-requisite to achieve the goal.

Where Bangladesh is
What is the position of Bangladesh? Lets look at some figure for the year 2001-2002
[In million U$]
Export 6476.0
Import (9363.0)
Tread Balance (2887.0)
Current Transfer 2316.0
Foreign Investment 174.0
Foreign debt (1999-2000) 1575.0
Total FC reserve end of 2001 1305.5
[Source: Bangladesh Bank report]

Our trade balance is negative by around 3 billion US dollars. To recover this deficit we need more foreign currency to be added with inbound dollars. Our own major source of foreign currency is just two, Inward remittances & Export earnings. We must enhance these two areas to cover up the deficit.

Increase Inward Remittance

Firstly, inward remittance can be increased in large scale if all the Bangladeshi people living abroad send money to Bangladesh in legal way instead of 'hundee' etc. Government should emphasis Middle East and South East Asian region priority base. Because most of the less educated Bangladeshi workers are employed there and they send a huge amount every year by using illegal channel. One of the reasons for sending money by illegal channel is ignorance and lack of consciousness. For many of them, banking process is really a difficult matter and many of them never maintain a bank account. In that case our foreign missions and embassies can play an important role to motivate them to use legal channel for sending all their money. A co-ordination is needed between embassies and foreign branch of local bank. If this work can be done successfully that may add as much as 1 billion dollars to our economy.

Recently government took some initiative to make it easy to send remittance easy way. Electronic Transfer System quickened the receipt of money. But the best another alternative will be, if government can set a kind of booth in all the foreign embassies in different country who will receive money from the people and send it to Bangladesh. May be Sonali Bank can help in this area. To encourage using banking channel, the traditional formalities of money transfer can be avoided. People will deposit the money to the booth with the address of recipient and rest of the job can be done by embassy. Whatever, there must be a change.

Boost Up Export Sector:

Secondly, we must boost up our export sector. Now only garment sector contributing about 75% of our total export. Yet garments sector is the only better source for foreign currency. Age of garments business is around 20 years. Needless to say that most of the business like banks, insurance companies, forwarding company, Transport business, accessories suppliers etc surviving in Bangladesh depending only on garments sector. If this sector is collapsed the whole economy will be jeopardized. Destruction will be immeasurable. Already Bangladesh started facing the hardship in this garments business and we must find an alternative immediately. To boost up our export we need to attract foreign investment very badly. Government keeps trying to attract investors in different ways. But we should remember that by the Seminar, Workshop and Exhibition in not enough to attract foreign investment. We really have to understand that. An investor considers Investment Environment for investing anywhere. Bangladesh must create the environment if she really wants to have a large amount of foreign investment. Without creating a standard infra structural facilities, inviting foreign investor is just useless. It is simply like inviting a guest to your home without preparing food and accommodation.

Not only foreign investment, if the climate of investment is not good, we can't expect local investment too. If the investment is not safe, if the return from investment is uncertain no one will utilize their money for any business or industry. So, we must ensure the environment before expect mass development in investment.


PART-III (Development and Enhancing the Investment Environment)


"We have to create the right climate for bigger and bigger investments. There are three investment climates that we should keep our eyes fixed on ---- domestic, international, and regional. The domestic investment climate depends heavily on the international climate. The international climate which is going through a lull, will soon start picking up. But when it does, will it come our way? We must prepare ourselves quickly to answer this question positively. If our law and order situation continues to deteriorate, as it is doing now, we can forget about foreign investment. Corruption and violence have become the order of the day. Nothing can work in an environment of limitless corruption and deteriorating law and order. Even the poor borrower of micro credit is not sure if her investment is safe. Restoring law and order and bringing down the corruption level to a level consistent with at least the SAARC countries." Dr. Muhammad Yunus in The Daily Star.

What is the Investment Environment?

The environment of investment can be defined as the composition of various infra-structural facilities that create the environment for investment. As such, there are five very important pre-requisites:

1. Port
2. Tele-communications
3. Electricity
4. Inland road transport etc.
5. Rules of law

To arrive at a certain level of our goal, we must have an "uninterrupted development process and no political interference in the development works." Only then will we be able to reach a satisfactory level in the above five pre-requisites. Singapore ensured it. Taiwan ensured it. Malaysia ensured it. Indonesia ensured it. The Philippines ensured it. Thailand ensured it and recently Vietnam also ensured it. They all understood the importance of the environment of investment and prepared their country to adopt foreign and local investment in the industrial sector. There is no other alternative.


A Brief Comparative Study:

I would like to compare our country with a nearby country, Vietnam, whose economy, size, and many other factors are similar to Bangladesh. A large number of prominent foreign companies have invested over there within a short time. In the last decade, countries such as South Korea and Malaysia were our development models. But they are already far ahead, and we can now see only Vietnam, which is experiencing its highest growth rate in GDP in recent history, as a country that is comparable to Bangladesh, who is also going up within very short time.

Only a few years ago, Vietnam opened her doors to foreign investment and the following companies entered there for investment:

Hi-tech : IBM, Oracle, General Electric, Nokia, Siemens, Philips,
Electrolux, ABB

Automobile : BMW, Ford, Daimler-Chrysler, Toyota, Mercedes-Benz etc.

Aeronautics : Boeing

Why does Bangladesh not have any foreign investors comparable to those listed above? Why have these firms moved to Vietnam? Why not Bangladesh? What is special about Vietnam?

The answer is that Vietnam created the Environment for the Investors before they invited foreign investment. From my recent visit to Vietnam and by a brief study, I have determined the following elements were the basic factors enabling Vietnam to change their economy:

1. An education rate of 94% (about 99% of the population high school enrolled)
2. Well established infra-structural facilities
3. A strong but dynamic bureaucratic system
4. Lowest Crime rate
5. Clean and well organized cities

Bangladesh still has the chance to achieve the above goals successfully if our leaders and policy makers proceed with sincerity, and if they act less Politically and more Economically.



Conclusion: Let's Look at Our Own Resources

The above analysis states the necessity of the existence of a continuous development process in Bangladesh. No political or non-political interruption should be allowed in any development works. This process requires not only the building of infrastructure, but also improvements in education, in law and order, in the bureaucratic system, in all sectors. Bangladesh needs to identify the areas that have huge potential for an affluent future. It must eradicate all of the old complexes, such as poverty, overpopulation, corruption, hunger, and criminal activities. We have to recognize and take advantage of the fact that Bangladesh is the country of highest arable land in the world, with the highest fertility. We can produce our own food and we can use our own energy sources for industrial development.

Having energy resources is a great advantage for any country that is working to be industrialized. Bangladesh has big reserves of natural gas--enough for its own use for 20 to 50 years, depending on the growth rate of development. In addition, there is another valuable resource, largely unexplored in different places of southern Bangladesh.

Locally, it is called "black gold." Black gold is the popular term for the minerals lying in Cox's Bazaar and the surrounding area. The real names are Titanium, Zircon, Rutile etc. All of these are blended in the sand of the beaches in the area.

According to a valuation survey, in 1992-93, the estimated value of those minerals is (USD) $2,620,974,561,403.00!!!

This price is beyond our imagination. To obtain this high price, we need to PURIFY the minerals to a certain level. The purification process is difficult enough and costly, no doubt, but not impossible. Recently, a lease agreement was signed by an Australian company, International Titanium Resources. From a different source it has been found that the deal was not fair and favorable for us. We will not be able to get the price we are supposed to get. The agreement was made by bypassing the local experts who were on the development committee from an earlier stage. We therefore wish for the government to review the deal again and check to see if there is any irregularity and reach a final decision only after consulting with local experts from BUET etc.

The proper utilization of natural resources and human resources can be a powerful tool for substantial changes in Bangladesh within a short time. Bangladesh is a land of great undiscovered potential. Let's unearth the opportunities from our own golden soil.